Legal Question in Insurance Law in California

You are right to be concerned about liability. According to the fact outline you have provided, it is entirely his car and the ex is a permissive user. That makes your nephew jointly and severally liable for any accidents she gets in. On the other hand, if he is maintaining insurance on it, in an appropriate amount, he should be protected. What he MUST do, however, is make sure his insurance will cover this situation. Many policies only cover occasional permissive users. If someone other than the owner is the primary user, that person must be named as an insured on the policy and the premiums adjusted accordingly. If he has such a policy and doesn't make sure to get and keep the insurance coverages in order, they could deny coverage in the event of an accident.

This is an aside to your question, but I also wonder what his concern is about his credit rating. Why does he have to let his ex girlfriend have a car that he is paying for and insuring in order not to ruin his credit? That doesn't make any sense. Why doesn't he just take the car and sell it, or drive it himself?